Demand Based Pricing

Earlier this week Drew McManus talked about the problems with Demand Based Pricing. By some coincidence, I had posed a question about that very subject to the Performing Arts Administrators group on LinkedIn just before Christmas. The next day I caught the article by David Sharp that Drew linked to on that very subject so I cited it on the LinkedIn as well.

The discussion received a handful of responses, some from people who feel the practice of demand pricing has been successful for them. One person says a theatre at which his company will be performing starts at one price and then increases when a certain number of tickets have sold. Another says her company sets a premium on orchestra level aisle seats and then also starts raising prices when a threshold for each price section is passed.

The practice that piqued my curiosity, among some others, came from a gentleman who stated they offer the best discounts to the best customers and that the “Net revenue per ticket has increased without raising ticket prices.” Someone beat me to the question about how they tracked and applied the discount. I am partial to this approach because it rewards loyalty and can be used to build a relationship with people. Raising the prices as the seating fills only encourages people to order early but not necessarily often. Unfortunately, we haven’t received an answer yet.

I assume if some people have started experimenting with demand based pricing, a fair number of you have at least flirted and experimented with the concept. I would really be interested in learning about various initiatives others have used, especially in regard to successes and pitfalls one may have encountered.

BTW- If you are interested in speaking with people who have already started experimenting with these pricing structures, join the LinkedIn group. None of those who commented have anonymous aliases. I just avoided mentioning their names in the hope readers will be driven by curiosity to join and contribute to the discussion.

Lasting Influence of Superlative Volunteers

Late last week, I received news that a superlative volunteer at an organization I was once employed had died. The news shocked everyone given that she was only in her mid-fifties. Even though I no longer work at the organization, I wanted to use the forum of my blog to do honor to her on the day of her wake to acknowledge the place she had in my life and so many others.

Beverly Dodge was not, to my knowledge, related in any way to Geraldine R. Dodge but on a local level she contributed as much to the arts in her community as the Dodge Foundation. She proved the adage about there being no small roles, only small people. Even in the most passive sense, people’s lives connected with her’s. Her family had a long history in the small town where she lived. One of the staff of my former employer lives in the house Bev grew up in. Although the general store which Bev’s parents once owned closed for a number of years after their deaths, the woman who bought it kept the Dodge name in acknowledgment of it’s history in the town.

She never married but she did have many children. For many years she hosted Japanese exchange students for a year in high school. Some of them returned to live with her when they came back to the U.S. for college. I never heard any of them call her anything but Mom. A couple even brought boyfriends back from Japan to meet Bev.

Bev was the volunteer coordinator at the local hospital and was a primary force in the community fair the hospital held every year. She had a real service orientation in her life. In addition to volunteering for Appel Farm, where I worked, she was active in her church. A couple years ago for her 50th birthday she asked that instead of buying gifts, attendees bring cash that would be donated to Heifer International, an organization that buys livestock, birds and plants to enable people to feed and support themselves.

Of course, she also volunteered for Appel Farm and was the primary hospitality entity that interacted with many groups. For small groups, I took care of hospitality needs but when it came multiple groups or larger events, she was the go to person. She was highly organized, attentive, resourceful and calm in the face of frantic or demanding artists. These are all crucial traits for a hospitality person to have. But she was also patient in the face of long periods of down time and that is something I haven’t found in a volunteer since.

There is a hurry up and wait element in some presenting situations. There is a rush to get everything set up correctly and get food set out and coffee made. Then when the artist arrives there are bus drivers to run to hotels, clothes to be pressed and ironed. But then, you wait….and wait…and wait some more. This is a sign that everything is okay in most cases. People who haven’t done this before feel like they are useless. They have been asked to come in six hours before the curtain. There was a lot to do and now, there is nothing.

But they aren’t useless. I have a lot run around to check on. Other volunteers to meet. Security people to check on. Artists and technicians whose progress I need to monitor. It is a great relief to me that I don’t have to worry about making coffee, icing down more water, running unanticipated errands. When all the little quick jobs aren’t being done, they add up. It’s isn’t just the jobs themselves, it is wiping up the loose coffee grounds, throwing away used plates and crumpled napkins to maintain a pleasant appearance in the green room. Done all at once these things take a lot of time you may not have if you are dealing with thousands of other details.

It is tough to find someone who recognizes that like Bev did and who plans to bring a book and knitting to do. She would introduce herself, quietly withdraw into a corner and then step forward when it was apparent that there was a need. If having good front of house staff is crucial to audience relations, good hospitality staff is crucial to making the performers comfortable, happy and prepared to put on a great show.

There were also occasions where she would have the artists over her house for dinner. It wasn’t terribly often. A lot of people are wary about ending up obligated to remain in the same room as a potentially overbearing fan. But there are a couple people who took a chance or heard good things who welcomed the opportunity for a home cooked meal in the middle of a lengthy tour. Those who didn’t eat at her house became her friend and engaged in lively chatter with her. Even those artists who tended to be reclusive and reserved warmed up to her –or at least what passed for warming up in the context of their normal behavior.

One of the biggest hospitality services Bev provided was during our annual outdoor music festival. Having deep roots in the area, Bev had a lot of cousins. Some of them helped us out on other events, but pretty much all of them got pulled in to the Festival. Fortunately, Bev was sweet tempered because it could have gone badly for us if we got on her bad side. As it was, there was a wedding in the family on the same day as the festival one year and we lost the half of the family that felt closer to the bride than the other half. (Though loyalty still ran high as some of them skipped out of the reception to come to the festival.) I am hoping with her death one of her trusted lieutenants will take charge of the area.

If you have ever volunteered on a music festival, you may know that it can be difficult to get one of the more prestigious assignments. In some cases, this is good because you want trusted, tested people on the crew. The problem with some places is that the crews become very insular and political in a less than constructive way. We tried to prevent this from developing through the general low key environment we cultivated and the process by which people could volunteer. Given we were trying to get 500 volunteers a day, we did depend on crew chiefs to do a lot of the recruitment, but we also introduced people we were trying to develop as future leaders so there was always new blood.

I tell you this to illustrate the trust we had in Bev when I say we never worried about this happening in the artist hospitality area. Part of it I think was due to the fact that she and many of the people she recruited were much more involved with the organization on a year round basis. Even though she was the volunteer coordinator at the hospital, she drew on very few of them. As many cousins as she had in the area, it wasn’t all family either. Many of them lived locally and I guess intuitively understood what we needed from them—and then they would go an extra mile.

I mean, I would take 12-14 artist riders and make a shopping list. We would fill up three flatbed carts at Sam’s Club and then three vehicles to get it all back to the office. Then we engaged a caterer to make food for the artists and volunteers. The amount of food Bev and her cousins brought themselves, you would think we were scheming to starve the performers. There were pots and pots of stuff they had been making for weeks. And Bev would have copies of all the riders so she could make sure to set aside any special requests specific groups had so she knew exactly what I was getting.

Other than being concerned about breaking an overloaded axle on the drive back from Sam’s Club, we never had to worry about artist hospitality on Festival day. Bev would borrow tables from the Ladies Auxiliary and get the room set up days in advance. All we had to do is pile up the food we bought, the stuff to eat it off of and provide plenty of trash bags to haul it away.

I know that there were other people who were involved in organizing the details on festival day. They know the process Bev used. They know the list of things to be done. Even though I am gone, I am still worried about what this year’s festival will bring. At the very least, there will be a lot of rechecking to make sure nothing Bev usually does has been overlooked.

In the near term, as the holidays approach, her absence will be felt keenly. Every year she would get a humongous tree for her living room and invite family and friends to decorate it. I lived half a block away so I would always go. I would also help undecorate it. There were a lot fewer people at that party. The decorating party was a tradition for many people. People would drive in from hours away and renew friendships with those they met at last year’s party.

Bev has been on my mind a number of times since I left Appel Farm. Some times it was wishing she was volunteering for me at the time. Other times it was just wondering how she was doing. Other times it was thinking that I should send some of the Japanese snacks so readily available here but not as much in South Jersey to her for the Japanese students. I have seen her a couple times since I left so I have no regrets about our partings, only about not having the opportunity to meet again.

If you are moved in some way by this story and want to help her continue her legacy, donations can be made in her name to the following organizations:

Appel Farm Arts and Music Center– (856) 358-2472
South Jersey Healthcare-Elmer Hospital– 856-363-1000
She also listed her church as a recipient, but I need to double check on the information and post it.
The Church of the Good Samaritan, Paoli, PA – Freedom and Christ Scholarship Fund (610) 644-4040

Marketing Tip- Public Radio Fund Drives

Everybody Wins

There is a helpful marketing tip of which I have been aware but neglected to mention. If you ever have the opportunity, it could be beneficial to appear on a fund drive for your local public radio station. The result can be a win-win situation for both you and the station. I have never been on, but will be this weekend. I have a few colleagues who speak well of the opportunity. I will admit as many times as other have talked about the value of the experience, I didn’t take the initiative to approach the station about the possibility, they called me in this instance. But if all goes, well perhaps I will be submitting proposals in the future.

If you can provide some sort of desirable item or service they can use as a premium reward for listener support and are willing to go on air to encourage people to pledge some support, you will also have the opportunity to talk about your organization. After all, the better your organization sounds, the more desirable the tickets/membership/sculpture reproduction you are offering appears, the higher the station can value the objects or services you provide today and in subsequent years.

All About Building Awareness

Even if the timing of the particular pledge drive falls during your off season so you are offering subscriptions to an unannounced season or to a very popular annual event whose details haven’t been finalized yet so you can’t talk about specifics, the mere act of increasing awareness of your organization is of value. My appearance on the show may not result in any ticket sales but at the very least it creates goodwill by showing we support a program listeners care about.

That is why I refer to this as a marketing opportunity rather than advertising. First of all, public radio stations have restrictions on calls to action in underwriting so there may be a restriction during fund drives as well. Second, this is a much greater opportunity to tell your story and position yourself in the community than is afforded during a 30 second advertising post. The value of the tickets versus being able to talk about my organization for a couple of minutes between songs over the course of 30-45 minutes is a pretty good trade off.

Different Preparation

Having an expanded opportunity to talk about your organization means a different type of preparation than goes into writing press releases and ad copy. As I said, I haven’t been on yet but it is clear to me that as with any public appearance by a organizational representative doing a little advance research and picking the correct person to represent you is crucial. Not only do they have to be conversational rather than woodenly reciting, “Yes, Bob, we have been presenting the finest in polka and klezmer at the corner of Oak and Main for 34 years,” they have to assist the fund drive by citing the value of public radio to the community.

Obviously, what your organization does has to mesh with the programming on the station to some degree. We don’t do a lot of classical music so I am not going to be appearing during any of the classical music shows. But that works out for me because I will be on during the show that is most closely aligned with the performances we do present. It should go without saying it is also good if you sincerely feel the station is a benefit to the community and can speak passionately on the subject rather than just looking to exploit the opportunity entirely for your organization’s gain.

I’ll be interested to see how things turn out and will certainly report on the results.

NB- It occurs to me that I was remiss in mentioning that in the absence of being able to actively chat about your organization on air, you and your staff could volunteer to staff the phones or provide other assistance. I have never not heard the station host praise the organizations assisting with the phones by name numerous times an hour. Again helps generate awareness and good will for your organization.

Venture Capital and Stock Trading for Non-Profits

Slate Magazine is running a series this week on non-profit philanthropy and they are presenting some interesting ideas about how non-profits can benefit from common activities of the for-profit world.

One article talks about how Venture Philanthropists are using the venture capitalist model to help non-profits by providing support and guidance for increasing organizational capacity rather than operating funding.

The involvement of venture philanthropists seems rather recent. Venture Philanthrophy Partners, which the article identifies as a leader in the field, was founded in June 2000. They are apparently still in the process of figuring out how the whole VP-Non-Profit relationship should work.

From their website:

We originally applied a venture capital model for investing in nonprofits, and have refined this approach by blending it with time-proven lessons from foundations and nonprofits. We invest to build institutional strength, providing large amounts of scarce growth capital.

VPP is strategic, highly engaged, and works to become a trusted advisor to the nonprofits in which we invest-it’s much more than writing a check.

Some may balk at the idea of being responsible to both a VP group and a board of directors for their performance. However, unlike a board of directors, a VP group will research a non-profit’s industry and business environment extensively before proffering advice and guidance.

Another article from Slate proposed an idea for a stock market for non-profits called Dynamic Deductions. You have to read the whole article to figure out exactly how it would work. But simply, a person would buy X amount worth of shares but doesn’t take a deduction until he sells the shares. If the share value goes up, you take a bigger deduction than you would have had you donated directly. If not, you take a smaller deduction.

The big way this would differ from the stock market is that under this proposal, a non-profit would get money everytime the stock changed hands rather than the one time infusion a for-profit gets at its initial public offering. (Excluding the times they purchase and resell their stock, of course.)

This option doesn’t exist as yet because there are no laws creating or governing such transactions. I also don’t claim to be a master of finance, but the concept as laid out here seems generally sound. Large businesses would probably be interested in participating in the markets because they could potentially increase the value of their tax deduction by buying low and selling high.

The one hitch that will probably emerge for most arts organizations is that they are so small that buying their dynamic deduction shares may not be attractive to most people due to the small volume traded and thus the small appreciation in deduction value.

A solution might be that all the arts organizations in a region or city might offer shares as the Minneapolis Arts Collective, for example and then split the proceeds. Such a relationship could be beneficial for all members of the regional collective since it would behoove each member to promote and collaborate with the others as a way of driving up the share price. The region or municipality benefits by gaining the reputation of being a cultural hot spot hopefully leading to the attraction of new businesses and residents (but hopefully not leading to gentrification and skyrocketing rents.)

A couple pitfalls though that I can see immediately. First, such a relationship might also serve to create pressure among the members to program for the least common denominator in order to keep the share price high. The large Broadway touring house that has always programmed to wide appeal and gotten large donations might fret now that they are financially grouped with the small experimental theatre or art museum whose offensive show is making national headlines weakening confidence in the collective and its share price.

If dynamic deductions or something similar emerges as the way to fund arts organizations and displaces donations by individuals, corporations and foundations, there is a danger that divergent voices may never be heard. People wanting to do edgy stuff in a small space would have to self-fund if direct donations fell out of practice.

Some might say there is a danger that such a scheme would cause non-profits to act like their for-profit kin and hide bad news even more than they do so now for fear of undermining share price and overstate number of people served (vs overstating earnings). The former is a distinct possibility. The latter not as much given many arts organizations are doing so on their final grant reports now.

The other pitfall that occurred to me is that Little Arts Organization reluctantly agrees that Big Art House will get a bigger cut of the share proceeds based on the argument that their prominence in the community will be the main driver of trading in their shares. Ten years down the road, having benefitted from the infusion of cash, Little Arts Organization has grown in prestige while Big Art House has waned a little. Little Arts demands a larger cut now that their reputation is a factor in the share price too. Bitter in-fighting wracks the collective causing members to withdraw and dissolve the relationship.

On the other hand, a real large organization might feel there is nothing to be gained by joining with smaller ones in this manner. The arts collectives may initially be comprised of equals sharing as such. If one grows larger than the others and demands a larger share, it is at least easier to argue they deserve it based on merit since they all started from the same general point. (Or who knows, the market these shares trade on on may classify non-profits like the NCAA sports teams and the burgeoning org might get moved up to Class II-B trading by analysts.)

Despite these potential problems, exploring alternative options like venture philanthropic support and dynamic deductions is absolutely worth doing. The funding environment isn’t getting any better and arts organizations already operate with a slight antagonism and suspicion toward each other. It is too early to tell if these options are even the right ones. Of the two I have mentioned here, one doesn’t exist and the other is still in the refining stages.

The need to discover a way to implement a constructive shift in the support mechanism for arts organization seems imminent. The idea of venture philanthropists excites me because it shows that very smart, very experienced people want to get involved and effect change. I like the general concept of the dynamic deductions more because it promises a degree of independence and pride you don’t get when you have to annually ask people for money.